Change repayment rate - bank now requires new documents

Hi everyone,

I have a mortgage with ING for two years and thought, due to the current interest rate situation, it would be worthwhile to lower my repayment rate from 2.5% to 1% and stash the "saved" money in the daily allowance account for later special repayments. It would be beneficial in my case because my interest rate is still significantly lower than what you currently get on the daily allowance account. With my contract, I can also change the repayment rate twice for free during the term, after which each additional change costs €100. So I thought I’d use the first change now via the online portal to take advantage of this benefit.

Two days later I received a notification in my mailbox that the change is pending, but I need to fill out the form "Self-disclosure and asset statement" and submit the last 3 payslips within the next 14 days. So no more quick and uncomplicated like it was previously suggested.

Now I am uncertain. Nothing has changed adversely in my financial situation, but I am skeptical whether I should fill it out and submit it in good faith or if I have unintentionally triggered some process with reassessment, etc., and should rather call them and cancel the procedure.

What would you advise me?

Thank you in advance for your opinions!

If I were a bank, I would also become alert to this economic situation. "Normal people" do not reduce their repayment for fun, but only due to economic necessities.

If I were a bank, I would also become alert to this economic situation. "Normal people" do not reduce their repayments for fun, but only out of economic necessity.

But what relevance should that have? Is the bank allowed to tamper with a closed contract with fixed interest if the business partner's economic situation changes? I always thought the principle applies that contracts are binding. As long as the contracting party behaves in accordance, meaning pays their installments, I see no difference that a changed economic situation would make for the bank – even if that were the case? Or did I miss something in the fine print?

However, the bank also wants to ensure that the loan is repaid within a finite period. If the repayment rate is reduced from 2.5% to 1%, the repayment period increases significantly, potentially to the extent that a complete repayment during one's lifetime is no longer realistic. And the bank also has no guarantee that the assets currently placed in the [Tagesgeldkonto] will still be available in 10 or 15 years when the follow-up financing is due. All too often, this or that is bought because "there are still 15 years left" ;)

Are you sure that the repayment rate can simply be changed in both directions according to the contract? In my case, it says that I can increase the repayment rate, but not decrease it. A decrease would then be at the bank's discretion, which would only be considered in a financial emergency...

If the repayment is drastically reduced, then the outstanding debt and the risk for the bank also increase drastically. It is actually quite understandable that they request some information.

That is a drastic measure. Are you sure that with a repayment rate of 2.5%, the 1% still fits within your interest corridor? 1% was rejected for several years because the borrower is never (hardly ever) able to repay the loan. You are currently heading down this path.

due to the current interest rate situation, it would be worthwhile to reduce my repayment rate from 2.5% to 1% and stash the "saved" money in the overnight money account for future special repayments.

But please explain the calculation to me. Let's assume you borrowed €400,000 and repay 2.5%, then you repay €10,000 in the first year, leaving you with a remaining debt of €390,000 (sorry for the simplified calculation). Now you only want to repay 1%. Then you only repay €4,000 and would have a remaining debt of €396,000. Now you invest the “gained” €6,000 at 4%… makes a profit of €240… €240…! You want to use that for a special repayment… better go out to eat or take the children to the zoo. What sense does that make? That is less than what you would repay monthly with 2.5% per year. And that’s why the bank asks questions, because it makes no sense to lower the repayment to less than an economic level. And yes, you can, the contract allows it. But the bank can and may inquire and request current income verification in case of concrete suspicion. Ultimately, that is also security for you, should there be a valid reason for it.